Another Week Gone And Our Pathetic Government Still Hasn’t Resolved The Fiscal Cliff…(Because They Can’t!!)
Nov. 24, 2012
Immediately following the November 6th general election, congressional leaders and the president began positioning themselves for negotiations to deal with the upcoming “fiscal cliff”, a series of budgetary measures at end-2012 that will (if not addressed) result in a severe fiscal tightening and push the US economy back into recession
The approach of the fiscal cliff has concentrated policymakers’ minds on a high-profile issue that has been a flashpoint between the two political parties. Public debate has periodically focused on how to reduce the large federal budget deficit, but deadlock in Congress has precluded agreement so far. The parties are ideologically split on how to resolve the issue, which is a key reason why more progress hasn’t been made on deficit reduction. This is no bad thing: the economic recovery has been uneven and unemployment remains elevated, so a sharp, pre-emptive fiscal tightening would have been counter-productive. However, a series of earlier tax and spending decisions means that a severe fiscal contraction is scheduled under current law to start around the beginning of 2013, raising the prospect of a return to recession if Congress does not act.